Handset prices will now go up by at least 16 per cent, an equivalent of new tax requirement, a move the firms say will hamper the transition from feature phones to smartphones. They say the law assented to on
The handset makers fear the tax on mobile phones will hurt sales and slow down
"Higher mobile phone prices will act as a barrier to entry and lead to slower penetration growth," said
"It offers short-term revenues for the government but in the long run, tax benefits which would have originated from accelerated economic performance related to higher penetration will be foregone."
The new act paves the way for the taxation of previously exempted goods such as mobile phones, text books, computer hardware and software.
For example, the price of an entry-level smartphone such as the Ideos Ascend
The government initially hoped to raise Sh10 billion annually from the enactment of the law that has since been watered down.
The VAT tax break resulted in
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